Major meme token Dogecoin also retreated on Wednesday after a stellar run-up to three-year highs in recent sessions, as traders locked-in profits after Trump confirmed Elon Musk and Vivek Ramaswamy will lead the Department of Government Efficiency (DOGE).
Bitcoin shot up to record highs of nearly $90,000 this week, as crypto saw a week-long rally after Trump’s election victory. But focus was now on just what his policies will entail for crypto, as well as the broader U.S. economic outlook.
The world’s largest cryptocurrency fell 1.2% to $87,366.3 by 00:31 ET (05:31 GMT).
Bitcoin retreated from record highs as enthusiasm over Trump’s election win now appeared to be cooling, with focus turning to more cues on his planned policies, as well as upcoming economic data.
Trump has vowed to make America the crypto capital of the world, and has even floated the idea of a national Bitcoin reserve. Crypto proponents expect this to result in a friendlier regulatory environment, lending Bitcoin more credibility as an investment vehicle.
On the economic front, Trump is widely expected to dole out more expansionary policies, which could potentially underpin inflation and interest rates in the long term.
Consumer price index inflation data is due later on Wednesday and is widely expected to show inflation remained sticky in October- a trend that bodes poorly for expectations of lower interest rates.
Dogecoin fell 8.3% to $0.355270 after surging nearly 100% since Trump’s election victory. The token had initially risen sharply after Trump’s announcement on DOGE, but sharply pared gains.
The token was hit with profit-taking after Trump confirmed that Musk and Ramaswamy will lead the DOGE agency. Trump said the agency will work outside the government and will aim to reduce bureaucracy, “unnecessary regulations” and curb government spending.
The idea of DOGE was floated by Musk prior to the election and is seen as a reference to the meme token, although whether this will result in any actual, official use of the token remains unclear.
Musk has been a proponent of the token on social media, which is largely tied to its price action.
Broader crypto prices fell tracking a pullback in Bitcoin. World no.2 crypto Ether fell 5% to $3,163.50, after hitting an over three-month high this week.
ADA, SOL, XRP and MATIC sank between 4.7% and 11.5%.
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